The bank faced a potential mass exodus of talent last year when it admitted thousands of staff had sold millions of customers fake accounts without their knowledge. The offenses occurred over a number of years amid an aggressive sales culture imposed by management that pressured underlings to hit unrealistic sales targets.
Sloan stepped in to the top job in October, replacing John Stumpf, who resigned after eventually assuming accountability for the disaster.
“When you put your shareholders first—I hope Warren Buffett isn’t listening by the way—but when you put them first, then you’re going to make mistakes because you’re going to make short-term decisions that aren’t focused on creating a long-term, successful company,” Sloan told a conference yesterday.
Buffett is CEO of Berkshire Hathaway, one of Wells Fargo’s biggest shareholders. The billionaire investor would perhaps take issue with suggestions the bank’s old sales culture entailed looking after shareholders, given the ultimate damage it caused to its share price. Still, he has kept his shares in the company while Sloan tries to rebuild its tattered reputation.
“Wells Fargo designed a system that produced bad behavior,” Buffett said in November. “When you find that out you gotta do something about it, and the big mistake was they didn’t do something about it.”
Within days of taking the reins last year, Sloan had apologized to staff, telling them that the scandal was indeed management’s responsibility and not theirs. “Many felt we blamed our team members. That one still hurts and I am committed to rectifying it,” he told staff during a speech in North Carolina.
Since then, the bank has stopped paying employees based on how many products they sell. It also increased its minimum wage to $13.50 an hour from $12.00 in January—though at the time said the raise had nothing to do with the scandal.
“Turnover now in our retail bank is the lowest it’s been, that I can recall in my 30 years at the company,” Sloan, who was speaking at the Milken Institute Global Conference in California, said yesterday. The bank, he added, isn’t having any trouble attracting new employees.
Sloan isn’t the only CEO to recently warn of the perils of focusing on immediate share-price gains. As recently reported by Chief Executive, past and present CEOs as well as chairmen from the likes of Shell, Pfizer and Levi Strauss have called on the introduction of rules that make it easier for public companies to focus on long-term goals.
Measures the Aspen Institute recommend include discouraging the issuance of short-term earnings guidance and encouraging more transparency of long-term corporate value. “The goal is a better deal for Americans working to support their families and communities—and the restoration of public trust in capitalism itself as an economic system that works for all,” the Institute said.